ECONOMIC REPORT OF THE PRESIDENT

energy efficient and lower greenhouse gas-emitting path. Since President
Obama took office, substantial strides have been made toward achieving
this goal. Between 2008 and 2015, the U.S. energy system has shifted considerably
toward cleaner energy resources. Energy intensity, which refers to
energy consumed per dollar of real gross domestic product (GDP), declined
by 11 percent from 2008 to 2015, following a pattern of steady decline over
the past four decades. Carbon intensity, the amount of carbon dioxide
emitted per unit of energy consumed, has declined by 8 percent from 2008
to 2015, and carbon dioxide emitted per dollar of GDP has declined by 18
percent over this period. In fact, U.S. carbon dioxide emissions from the
energy sector fell by 9.5 percent from 2008 to 2015, and in the first 6 months
of 2016 they were at the lowest level in 25 years. These trends, in combination,
are favorable for climate change mitigation, and all have occurred while
the economy recovered from the Great Recession. The economy has grown
by more than 10 percent since 2008, and by more than 13 percent from its
recession low point in 2009.
Since mitigating climate change serves a public good benefiting all
countries, it also involves working with other countries to reduce greenhouse
gas emissions worldwide. In addition to mitigation, addressing
climate change involves building resilience to current and future impacts,
developing adaptation plans and preparing for the changing frequency and
severity of extreme events. Steps taken by the United States, along with
extensive outreach to other countries, subsequently helped pave the way
for the 2015 Paris Agreement in which more than 190 countries committed
to take concrete steps to reduce greenhouse gas emissions. The Paris
Agreement establishes a long-term, durable global framework with the aim
of keeping climate warming to well below 2 degrees Celsius.
Given that the impacts of climate change are already being felt today
and, that even with aggressive mitigation, impacts will continue into the
future, the optimal response to climate change includes not only mitigation,
but also adaptation. Building resilience to the current and future impacts of
climate change is akin to insuring against the uncertain future damages from
climate change. In parallel with domestic mitigation and global cooperation,
Administration policies have also promoted resilience.
This chapter reviews the economic rationale for the Administration’s
efforts on climate change and the transformation of the energy system. It
provides an overview of a selection of the most important policy efforts
and then examines the key economic trends related to climate change and
energy, many of which have already been influenced, and will be increasingly
influenced going forward by policy measures under the Administration’s
2013 Climate Action Plan. These trends include increases in electricity
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